It’s simple if we did not have any customers, we would not have any business, and no business means no income. When pricing your products and services it’s important that they are accurate and not over charged nor undercharged.
Your customers will expect to get what they paid for, so if you’re going to charge a high price for a product or service, it’s a no brainer that it needs to meet expectations, and its value, at the same time your business making a good profit from the sale. Getting your pricing right for your business can mean increase in sales and also can be a breakthrough for your business, if done incorrectly can cause your business to fail.
There are many ways one can price products and services, and use various strategies, statistics, and facts. It’s not a one rule that applies to all, it involves various factors, and points to take into consideration. As one wrong price may mean that business going to your competition, and I’m sure most of us have experienced this, where we give a price for a service, and that’s the end of that lead, your customer has gone somewhere else where they feel they are getting better value for money. It’s not necessary the cost factor, it’s the whole package that you put together and offer to your customer.
Below we will go though some BASIC points and factors to take into mind when pricing a product or service.
Market: One of the first things you do is get some market information, on the product and services, what are others offering, and how much are they selling the product / service for. On the other hand in your market research, is to get a better understand of your customer, whom you would be targeting. What they like and dislike, along with their ability to purchase.
The ability to know your customers will allow you to put together accurate costs, which will be acceptable and increase conversions.
Competition: Looking at what your competition offers and set your price within that range, as your visitors are already used to seeing and paying for your products in that price range, setting them too high or too low may raise questions, and if done so, you will need to justify this price well.
Price Variations: Use different tactic to attracts customers, if you can offer discounts and sales than do so and advise your customers of the prices and discounts available to attract them. Also try what retailers do by using odd price ranges such as selling a £10.00 product at £9.99 or £9.97, many customers see these prices as being more attractive.
Your cost: When working out your retail price, look at the overall cost of your product from start to end. Once you have a clear idea of what it costs you, you can than work on that to price your product. At times you may want to price your product low but have a fixed target which if sold xx amount you will make a good profit. For example just selling one envelope you may not make anything but selling 1000 envelopers you will probably make a profit.
Making a loss: Okay it doesn’t mean you will lose out, if done carefully it can work out in your favour. This is where you sell a product at a slightly low cost or not making a profit on a product, but bringing in the visitors which will purchase other products that you offer so that you will recover your costs and make a decent profit overall on the checkout. It’s about showing customers what you want once you have them on your site and in your store, and to do this sometimes you have to sell products at a very low price to bring in the other larger sales.
Unique Products: If you are offering products and services that are unique and not found easily, you can sell these products at a higher price, but they need to be unique or else you will price yourself out of the market.
Starting low: This is where you start with a low prices, and sell in large quantities, over time your competition will generally catch up with you, but you will by than have built yourself a good customer base, which will come to you for repeat purchases.
Overall when pricing your product take extra care, as this will position your business in the market, and be one of the first things that your visitors generally see when deciding on what services and products to buy.
Image by: Ariwasabi